The Chinese Anti-Monopoly Law
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The Chinese Anti-Monopoly Law

New Developments and Empirical Evidence

  • New Horizons in Competition Law and Economics series

Edited by Michael Faure and Xinzhu Zhang

This book focuses on experiences with the Anti-Monopoly Law (AML) of 2007 in China. It uses carefully-chosen case studies to examine how the competition authorities in China discuss cases and how they use economic reasoning in their decision-making process.
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Chapter 5: Research on the intensity and effect of industrial administrative monopoly in China

Liangchun Yu and Wei Zhang

Extract

China’s economic reform is a gradual process, which embodies a clear characteristic that the government’s economic power is continuingly decentralized to other participants. However, at present in many important industrial sectors in China, administrative power still plays an important, even decisive role in entrance, restrictions and pricing. This phenomenon we describe as an industrial administrative monopoly, which means government agencies use public power to restrict competition.1 As a specific phenomenon in transitional economies, administrative monopoly not only characterizes the features of industrial organization in many industries, but also becomes an important issue in the design of competition policy in transitional countries. Under administrative monopoly, competition is suppressed, and efficiency of resource allocation is distorted. Particularly in an economic environment between a market economy and a planned economy system, an administrative monopoly may easily lead to rent-seeking, which would cause great corruptions. The concept of administrative monopoly was proposed in the 1980s,but it has not been possible to be study the importance of administrative monopoly academically due to China’s three decades of rapid economic growth and increasing welfare increase cover; also, at the same time, private economic agents arising from market competition have difficulties in accessing particular industries with economies of scale.

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